Retail food prices rise in first quarter of 2008

Apr 18, 2008

U.S. retail food prices at the supermarket increased in the first quarter of 2008, according to the latest American Farm Bureau Federation Market Basket Survey. The informal survey shows the total cost of 16 basic grocery items in the first quarter was $45.03, up about 8 percent or $3.42 from the fourth quarter of 2007.

Of the 16 items surveyed, 11 increased, four decreased and one stayed the same in average price compared to the 2007 fourth-quarter survey. Compared to one year ago, the overall cost for the market basket items showed an increase of about 9 percent.

A 5-pound bag of flour showed the largest retail price increase, up 69 cents to $2.39.

Other items that increased in price were: cheddar cheese, up 61 cents to $4.71 per pound; corn oil, up 58 cents to $3.01 per 32-ounce bottle; a dozen large eggs, up 55 cents to $2.16; vegetable oil, up 38 cents to $2.63 per 32-ounce bottle; mayonnaise, up 22 cents to $3.14 for a 32-ounce jar; Russet potatoes, up 18 cents to $2.47 for a 5-pound bag; a 20-ounce loaf of white bread, up 16 cents to $1.78; apples, up 13 cents to $1.40 per pound; whole fryer chickens, up 9 cents to $1.37 per pound; and ground chuck, up 4 cents to $2.73 per pound.

Bacon was the only item in the survey that stayed the same in price, at $3.35 per pound.

Items that decreased in price were: whole milk, down 10 cents to $3.81 per gallon; pork chops, down 8 cents to $3.31 per pound; a 9-ounce box of toasted oat cereal, down 8 cents to $2.97; and sirloin tip roast, down 5 cents to $3.80 per pound.

“More than a third of the increased cost reported this quarter is attributed to the two oil products and mayonnaise, which is oil-based. As expected, the drop in price for vegetable and corn oil observed in the last quarter of 2007 appears to have been temporary,” said Jim Sartwelle, an AFBF economist. “Continued strength in the wheat and cheese markets also contributed to the overall price increase for the basket of items.”

In addition, “It is important to note the contribution of runaway energy prices to the retail cost of food,” Sartwelle said. “Transportation, processing, and packaging all cost significantly more now than in prior years.”

As retail grocery prices have increased gradually, the share of the average food dollar that America's farm and ranch families receive has dropped over time.

“In the mid-1970s, farmers received about one-third of consumer retail food expenditures on average. That figure has decreased steadily over time and is now just 22 percent, according to USDA statistics,” Sartwelle said.

Using that percentage across-the-board, the farmer's share of this quarter's $45.03 market basket total would be $9.90.

AFBF conducts its informal quarterly market basket survey as a tool to reflect retail food price trends. A total of 76 volunteer shoppers in 32 states participated in the latest survey, conducted during February.

According to USDA statistics, Americans spend just under 10 percent of their disposable income on food annually, the lowest average of any country in the world.